Vericity Corporation, located in the United States, has an accounts receivable of SF400 million due in one year from a firm in Switzerland. The current spot rate is SF1.67/$ and the one year forward rate is SF1.58/$. The annual interest rate is 3.0% in Switzerland and 4.0% percent in the United States. Vericity can also buy a one-year put option on the Swiss franc at the strike price of $.6440 per Swiss franc for a premium of $0.005 per Swiss Franc.

a. Compute the guaranteed dollar proceeds at the time of payment if Vericity decides to hedge using a forward contract. Show your calculations.

b. Compute the guaranteed dollar proceeds at the time of payment if Vericity decides to hedge using a money market hedge. Show your calculations.

c. List the steps that Vericity needs to take in order to use a money market hedge to eliminate its transaction exposure. Be sure to include the time (t=0 or t=1 year) at which each step must be taken.

d. Suppose that Vericity decides to hedge using an option contract. Assume that the forward rate is the best predictor of the future spot rate. Is Vericity likely to exercise its option contract? Explain using the rates provided. (1 point)

e. Compute the expected dollar proceeds at the time of payment if Vericity decides to hedge using an option contract. Show your calculations. (3 points)

2. After the 2008 Global Financial Crisis (GFC) the Central Bank of the United States and the federal government using fiscal policies both attempted to stimulate the economy.

a. What caused the GFC and what fiscal policy actions did the federal government take to stimulate the economy over the next 15 years? Be sure to define the key terms and the macro models you used to explain the outcomes.

b. Explain what actions the Central Bank took to stimulate the economy. Again, be sure to define key terms and the macro models you used to explain the path to economic growth.

The money supply for the United States is approximately $15 trillion, and average real GDP growth is three percent. If velocity decreases from zero to negative two percent, what value of U.S. Treasury Securities should the Fed buy or sell to target two percent inflation if the reserve ratio is ten percent. Report an open market purchase as a positive number, a sale as a negative number, and round to the nearest billion dollars.

In a survey of 1000 randomly selected adults in the United States, participants were asked what their most favorite and what their least favorite subject was when they were in school (Associated Press, August 17, 2005). In what might seem like a contradiction, math was chosen more often than any other subject in both categories! Math was chosen by 222 of the 1000 as the favorite subject, and it was also chosen by 362 of the 1000 as the least favorite subject.

(a) Construct a 95% confidence interval for the proportion of U.S. adults for whom math was the favorite subject in school. (Give the answers to four decimal places.)
(  ,  )

(b) Construct a 95% confidence interval for the proportion of U.S. adults for whom math was the least favorite subject. (Give the answers to four decimal places.)
(  ,  )

You may need to use the appropriate table in Appendix A to answer this question.

In 2017, the entire fleet of light‑duty vehicles sold in the United States by each manufacturer must emit an average of no more than 86 milligrams per mile (mg/mi) of nitrogen oxides (NOX) and nonmethane organic gas (NMOG) over the useful life (150,000 miles of driving) of the vehicle. NOX + NMOG emissions over the useful life for one car model vary Normally with mean 82 mg/mi and standard deviation 5 mg/mi.

(a) What is the probability that a single car of this model emits more than 86 mg/mi of NOX + NMOG? (Enter your answer rounded to four decimal places.)

(b) A company has 25 cars of this model in its fleet. What is the probability that the average NOX + NMOG level x¯ of these cars is above 86 mg/mi? (Enter your answer rounded to four decimal places.

Red Bull is the most popular energy drink in sales in the United States. Red Bull GmbH (the parent company) has observed that daily sales are normally distributed with an average of 6,284,050 drinks sold with a standard deviation of 8,130.78. What is the probability that on a given day between 6,290,096 and 6,301,996 drinks are sold? Question 9 options: 1) We do not have enough information to calculate the value. 2) 0.0136 3) 0.2149 4) 0.0005 5) 0.7715

Question 10 (1 point) When students use the bus from their dorms, they have an average commute time of 11.13 minutes with standard deviation 3.0876 minutes. Approximately 26.34% of students reported a commute time less than how many minutes? Assume the distribution is approximately normal. Question 10 options: 1) 9.18 2) 13.08 3) 5.1 4) 17.16 5) We do not have enough information to calculate the value.

Question 11 (1 point) Suppose that the distribution of income in a certain tax bracket is approximately normal with a mean of $53,183.88 and a standard deviation of $1,799.608. Approximately 18.56% of households had an income greater than what dollar amount? Question 11 options: 1) We do not have enough information to calculate the value. 2) 54,793.14 3) 51,574.62 4) 2,842,851 5) 2,949,219

Question 12 (1 point) According to a survey conducted by Deloitte in 2017, 0.4609 of U.S. smartphone owners have made an effort to limit their phone use in the past. In a sample of 89 randomly selected U.S. smartphone owners, what is the probability that greater than 46 will have attempted to limit their cell phone use in the past? Question 12 options: 1) 0.0241 2) 0.1703 3) 0.8779 4) 0.0483 5) 0.1221

Question 13 (1 point) According to a survey conducted by Deloitte in 2017, 0.4702 of U.S. smartphone owners have made an effort to limit their phone use in the past. In a sample of 54 randomly selected U.S. smartphone owners, what is the probability that between 22 and 29 (inclusively) will have attempted to limit their cell phone use in the past? Question 13 options: 1) 0.1383 2) 0.7244 3) 0.2756 4) 1.0844 5) 0.0132

Question 14 (1 point) According to a survey conducted by Deloitte in 2017, 0.44 of U.S. smartphone owners have made an effort to limit their phone use in the past. In a sample of 87 randomly selected U.S. smartphone owners, approximately __________ owners, give or take __________, will have attempted to limit their cell phone use in the past. Assume each pick is independent. Question 14 options: 1) 4.63 , 38.28 2) 38.28 , 21.40 3) 87 , 4.63 4) 38.28 , 0.44 5) 38.28 , 4.63

What are your thoughts on the ongoing trade talks between China and the United States? President Trump has made it an important goal of his administration to try to level the playing for American producers.

Without letting politics outweigh the economics, offer your thoughts on these trade negotiations. Most agree that an all out trade war would negatively impact both economies, at least in the short run. Is this a fight worth sacrificing for?   

A random survey of enrollment at 35 community colleges across the United States yielded the following figures: 6,415; 1,549; 2,107; 9,348; 21,829; 4,300; 5,943; 5,724; 2,824; 2,043; 5,483; 5,199; 5,855; 2,749; 10,010; 6,359; 27,002; 9,416; 7,679; 3,201; 17,502; 9,202; 7,380; 18,313; 6,558; 13,714; 17,769; 7,491; 2,769; 2,862; 1,262; 7,283; 28,163; 5,082; 11,624. Assume the underlying population is normal.

• Part (a)

  Find the following. (Round your answers to the nearest whole number.)(i)    

  x =  

• s_x =  

• n = 35

• n − 1 = 34

• Which distribution should you use for this problem? (Enter your answer in the form z or t_df where df is the degrees of freedom.)

• Part (d)

  Construct a 95% confidence interval for the population mean enrollment at community colleges in the United States.(i) State the confidence interval. (Round your answers to two decimal places.)

  ( , )

  
  
  (ii) Sketch the graph. (Round your answers to two decimal places. Enter your α/2 to three decimal places.)

  	CL = 0.95
  α 2 = 0.025		α 2 =0.025
  	0.05

  
  (iii) Calculate the error bound. (Round your answer to two decimal places.)

World Foods, Inc., imports food products such as meats, cheese, and pastries to the United States from warehouses at ports in hamburg, Marseilles, and Liverpool. Ships from these ports deliver the products to Norfolk, New York, and Savannah, where they are stored in company warehouses before being shipped to distribution centers in Dallas, St. Louis, and Chicago. The products are then distributed to specialty food stores and sold through catalogs. The shipping costs ($/1,000 lb.) from the European ports to the U.S. cities and the available supplies (1,000 lb.) at the European ports are provided in the following table:

The transportation costs ($/1,000 lb.) from each U.S. City of the three distribution centers and the demands (1,000 lb.) at the distribution centers are as follows:

Determine the optimal shipments between the European ports and the warehouses and the distribution centers to minimize total transportation costs.